Senate Government Organization Committee Approves Calderon Bill Providing Legal Certainty for Use of Blockchain Technology

Tuesday, June 26, 2018

SACRAMENTO, CA – Assembly Bill 2658, a measure authored by Majority Leader Ian Calderon which provides greater legal certainty for blockchain technology, passed the Senate Government Organization Committee today with bipartisan support, 13-0.

“As a complex, emerging technology, it is important to fully understand the legal implications and the potential consequences of state or local regulation of blockchain,” stated Majority Leader Calderon. “There are many unknowns surrounding the risks of government use of blockchain, as well as the risks to industry from unnecessarily burdensome regulation. It’s important to define “blockchain technology” in statute and identify potential technical, regulatory, and governance hurdles in order to provide greater certainty regarding the technology’s legal standing.”

A blockchain is a type of distributed ledger that keeps continuously updated digital records. As a distributed ledger, it does not have a central administrator but rather a network of replicated databases, which are synchronized via the internet. Blockchain networks can have a restricted membership or be publicly accessible.

The innovation of blockchain technology is that transactions or interactions between peers no longer need a central authority to validate them. Blockchain allows parties who have never met and have little reason to trust each other to conduct sensitive business transactions quickly and efficiently. This provides both security and efficiency benefits to potential users, businesses, and industries.

AB 2658 will establish a blockchain working group to study the uses of, risks and benefits associated with, and the legal implications of the use of blockchain by state government and California-based businesses. The working group will be comprised of industry leaders, technical experts, representatives from privacy and consumer protection organizations, as well as state information officers. Additionally, the measure defines “blockchain technology” for the first time in statute.

In 2017, the Illinois Legislature adopted House Joint Resolution 25, which created the Illinois Blockchain and Distributed Ledger Task Force. In 2018, the task force released its report on the risks and opportunities associated with government applications of blockchain. Other states such as Vermont, Nevada, Delaware, Hawaii, and Arizona have also passed legislation related to blockchain technology.

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Contact: Lerna Shirinian (562) 692-5858